The author states that, in spite of a phenomenal increase in the interest of return on investment (ROI) on human resource development (HRD) during the 1990s, there is no book with a comprehensive and practical presentation of the subject. Most models of the application of ROI on training ignore the two key elements: isolating the effects of training and converting data to monetary values. Out of ten chapters, two are devoted to these important issues, each suggesting ten different ways to consider the problems. The other chapters include: a search for best practices: the ROI model: post‐program data collection; tabulating costs: calculating return, identifying intangible measures: ROI at multiple levels: and implementation issues.
Philips refers to ten criteria for an effective ROI process: the process must be simple, economical, credible and theoretically sound, account for other factors and be appropriate with a variety of HRD programs. It must have the flexibility to be applied to pre‐programs as well as post‐programs. be applicable with all types of data, include the costs of the program, and finally, have a successful track record.
The most central part in the ROI process is the collection of data but, before accomplishing this, the purpose of the evaluation, evaluation instruments, evaluation levels and the evaluation timing have to be considered. To get a credible ROI, the organisation must isolate the effects of training and soft data that cannot, or should not, be converted to monetary values. These should be included as intangible benefits in the final evaluation.
Barriers (realistic or false perceptions) to ROI implementation are proposed to be costs and time, lacking skills of HRD staff, faulty need assessment, fear from HRD‐personnel, discipline, planning, and false assumptions. Philips suggests that the user be cautious when applying ROI and, for example, include strategies for isolating the effects of training, use the most credible and reliable sources, take a conservative approach when estimating both benefits and costs, and involve management.
However, the author has not highlighted the danger of miscalculating when dealing with multiple benefits from the same investment. There are examples of both hard data (in total 56 different examples) and soft data (in total 39 examples) but many of these data describe the same benefit in different ways. For instance, an improvement in productivity might be an effect of decreased absenteeism or turnover. If converting both the improved productivity and the decreased absenteeism and turnover to monetary values, the ROI might include the same benefit twice, although described in different ways.
The model provided by Philips is theoretically correct and explains in detail the different steps that must be taken to get an accurate and credible return on investment but the book does not raise any further and important issues for research. On the contrary, it overlooks the very important and intriguing question regarding why ROI is not used. Knowledge about how to calculate the financial utility of training and other HRD activities has been around for quite a while (compare the “utility analysis” literature published during the last 30 years) but, according to some existing research and our own experience, the ambition of a systematic and sustainable use of ROI (or similar models) seems to be discontinued. Why? A chapter based on the author’s own experience on this point would have significantly increased the quality of the book.
The present book is well arranged and very easy to read and, even if it does not in any way extend current knowledge as presented in academic literature, the book may nevertheless fulfil a mission as a practitioner’s guide among HR people.
